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Discussion #29 - International Wages

Converted to USD for comparison (buying power similar all over the world). Typical wages for manufacturing production workers in 36 major countries (2012) per hour.

U.S. - $24 | India - $1 | China - $2 | Australia - $34 | Japan - $20
Philippines - $1.50 | Mexico - $4.50 | U.K. - $22 | Brazil - $6
Switzerland - $38 | Sweden - $28 | Poland - $5 | Canada - $26
Portugal - $7.50 | New Zealand - $21 | Singapore - $16
Italy - $19 | Norway - $52 | Slovakia - $6 | Netherlands - $23
Belgium - $25 | Greece - $11 | France - $20 | Czech Rep. - $7
Korea - $16.25 | Israel - $15.25 | Denmark - $36 | Taiwan - $8
Finland - $25 | Argentina - $13 | Austria - $22 | Spain - $15
Estonia - $7 | Germany - $27 | Ireland - $26 | Hungary - $5

The population of earth is just over 7.4 billion, almost half in India & China alone. Wages in these 2 countries were approx. 60 cents per hour in 2002. Improving but still nowhere near most western countries. Unemployment rates in Spain & Greece are currently over 20%, many other countries even higher. The other main factor affecting middle class wages is automation. Every day more robots are added to factories, reducing the need for human labor. The industrial revolution turned a mainly farm-based work force into a mainly industrial, & now technology is permanently displacing many of these workers as it advances & becomes cheaper.

Sources: U.S. Bureau of Labor Statistics, and Wikipedia

www.bls.gov/fls
http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate
International Labor Comparisons (ILC)
www.bls.gov

Globally, unemployment statistics are extremely misleading. They are designed to make their governments look good, but not so much the citizens who are struggling to achieve or maintain a decent-paying career. In most countries, those out of work generally drop off the unemployed stat and onto the Labor Force Participation stat after only 4 weeks. What this means, is that many have just given up, or simply have not found a job after 1 month of being jobless. Since very few people even know about the participation stat, many governments use it to hide the real unemployment numbers. It does not take an economics degree to understand this little trick, yet very few have even heard of it.

The participation numbers represent all those in a country who are working (or not working). The stat includes retirees, stay-at-home moms (or dads), those on disability pensions, etc., and you guessed it, those out of work for over 1 month. You can see how easy it is to just hide the recently (or not so recently) jobless into this stat. Also, there is the reality of most higher-paying jobs residing in the larger cities, and the higher cost of living or commuting basically nullifying these higher wages. This is a trend that will only intensify as time progresses, making it much tougher for the average person to get ahead in life.

On top of this, there is another huge phenomenon which should be factored in. The massive baby boomer bulge, which is (as we speak) greatly beginning to affect all richer countries' economies. As the baby boomers have been exiting the workforce (en masse) for a few years now, the effects of this have not really been all that dramatic, yet. What will happen very soon, is we will start to see the unemployment rates begin to decline a little, which will make things seem fairly rosy, for a while. Unfortunately, once this powerful demographic works it's way through the system, (over the next 20ish years), the naked long-term reality will eventually settle in. This will inevitably greatly affect the law of supply & demand for labor, and therefore greatly affect wages in most countries.

All governments love the go-to plan of retraining or reeducating to try & improve rising unemployment. While this is indeed a great solution for many, it does not really address the root underlying problems of automation and globalization. Even with all of the retraining in the world, the global game of "musical jobs" will continue virtually unabated, if we don't address the real causes of this problem.

The icing on the cake of this situation, is that absolutely the only method that many countries will have to maintain or increase economic growth, will be to open the floodgates of immigration. For the next 15 years or so, this is exactly what they will do. It also solves the problem of mismatched skills, as they can literally cherry-pick individuals with the skills that are in short supply. The only problem is, once the boom is over, there will be 20 years of advanced technology to deal with, on top of 20 years of globalization and outsourced jobs. My humble advice is make, save & invest as much money as you possibly can in the next 15-20 years, 'cause it's gonna get a lot tougher after that!
Discussion #29 - International Wages

Converted to USD for comparison (buying power similar all over the world). Typical wages for manufacturing production workers in 36 major countries (2012) per hour.

U.S. - $24 | India - $1 | China - $2 | Australia - $34 | Japan - $20
Philippines - $1.50 | Mexico - $4.50 | U.K. - $22 | Brazil - $6
Switzerland - $38 | Sweden - $28 | Poland - $5 | Canada - $26
Portugal - $7.50 | New Zealand - $21 | Singapore - $16
Italy - $19 | Norway - $52 | Slovakia - $6 | Netherlands - $23
Belgium - $25 | Greece - $11 | France - $20 | Czech Rep. - $7
Korea - $16.25 | Israel - $15.25 | Denmark - $36 | Taiwan - $8
Finland - $25 | Argentina - $13 | Austria - $22 | Spain - $15
Estonia - $7 | Germany - $27 | Ireland - $26 | Hungary - $5

The population of earth is just over 7.4 billion, almost half in India & China alone. Wages in these 2 countries were approx. 60 cents per hour in 2002. Improving but still nowhere near most western countries. Unemployment rates in Spain & Greece are currently over 20%, many other countries even higher. The other main factor affecting middle class wages is automation. Every day more robots are added to factories, reducing the need for human labor. The industrial revolution turned a mainly farm-based work force into a mainly industrial, & now technology is permanently displacing many of these workers as it advances & becomes cheaper.

Sources: U.S. Bureau of Labor Statistics, and Wikipedia

www.bls.gov/fls
http://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate
International Labor Comparisons (ILC)
www.bls.gov

Globally, unemployment statistics are extremely misleading. They are designed to make their governments look good, but not so much the citizens who are struggling to achieve or maintain a decent-paying career. In most countries, those out of work generally drop off the unemployed stat and onto the Labor Force Participation stat after only 4 weeks. What this means, is that many have just given up, or simply have not found a job after 1 month of being jobless. Since very few people even know about the participation stat, many governments use it to hide the real unemployment numbers. It does not take an economics degree to understand this little trick, yet very few have even heard of it.

The participation numbers represent all those in a country who are working (or not working). The stat includes retirees, stay-at-home moms (or dads), those on disability pensions, etc., and you guessed it, those out of work for over 1 month. You can see how easy it is to just hide the recently (or not so recently) jobless into this stat. Also, there is the reality of most higher-paying jobs residing in the larger cities, and the higher cost of living or commuting basically nullifying these higher wages. This is a trend that will only intensify as time progresses, making it much tougher for the average person to get ahead in life.

On top of this, there is another huge phenomenon which should be factored in. The massive baby boomer bulge, which is (as we speak) greatly beginning to affect all richer countries' economies. As the baby boomers have been exiting the workforce (en masse) for a few years now, the effects of this have not really been all that dramatic, yet. What will happen very soon, is we will start to see the unemployment rates begin to decline a little, which will make things seem fairly rosy, for a while. Unfortunately, once this powerful demographic works it's way through the system, (over the next 20ish years), the naked long-term reality will eventually settle in. This will inevitably greatly affect the law of supply & demand for labor, and therefore greatly affect wages in most countries.

All governments love the go-to plan of retraining or reeducating to try & improve rising unemployment. While this is indeed a great solution for many, it does not really address the root underlying problems of automation and globalization. Even with all of the retraining in the world, the global game of "musical jobs" will continue virtually unabated, if we don't address the real causes of this problem.

The icing on the cake of this situation, is that absolutely the only method that many countries will have to maintain or increase economic growth, will be to open the floodgates of immigration. For the next 15 years or so, this is exactly what they will do. It also solves the problem of mismatched skills, as they can literally cherry-pick individuals with the skills that are in short supply. The only problem is, once the boom is over, there will be 20 years of advanced technology to deal with, on top of 20 years of globalization and outsourced jobs. My humble advice is make, save & invest as much money as you possibly can in the next 15-20 years, 'cause it's gonna get a lot tougher after that!